Modeling the determinants of meet-or-just-beat behavior in distribution discontinuity tests

Dmitri Byzalov and Sudipta Basu

Journal of Accounting and Economics, 2019, vol. 68, issue 2

Abstract: We develop new distribution discontinuity tests conditional on multiple explanatory variables for analyzing meet-or-just-beat behavior around benchmarks. These tests combine Burgstahler and Dichev's (1997) meet-or-just-beat intuition with a flexible statistical model that addresses important limitations of the existing tests. Our method considerably outperforms logit-based tests of distribution discontinuity determinants and changes the interpretation of a major finding in the earnings discontinuity literature. As a secondary benefit, it also has slightly higher statistical power than histogram-based tests of distribution discontinuity existence. Our method is robust, easy to implement using our publicly available Stata command, and could benefit researchers in many fields.

Keywords: Standardized difference test; Performance benchmark; Bright-line rule; Smooth distribution; Non-linear interpolation; Conditional distribution (search for similar items in EconPapers)
JEL-codes: C20 C25 M41 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S0165410119300618
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:68:y:2019:i:2:s0165410119300618

DOI: 10.1016/j.jacceco.2019.101266

Access Statistics for this article

Journal of Accounting and Economics is currently edited by J. L. Zimmerman, S. P. Kothari, T. Z. Lys and R. L. Watts

More articles in Journal of Accounting and Economics from Elsevier
Bibliographic data for series maintained by Catherine Liu ().